In a significant ruling by the Supreme Court of India, a clarification on limitation periods in the context of the Insolvency and Bankruptcy Code was provided in the case of B.K. Educational Services Pvt. Ltd. vs. Parag Gupta & Associates. The judgment highlights the relevance of Article 137 of the Limitation Act in applications filed under the Code, setting aside previous misunderstandings. This development paves the way for a fresh determination of the matter, ensuring adherence to legal principles. #LegalJudgment #LimitationPeriod #SupremeCourt
Analysis
- In the impugned judgment, it was stated that the right to apply under the Insolvency and Bankruptcy Code accrued on 1 December 2016 when the Code came into force.
- This statement is contrary to the position previously clarified in the B.K. Educational Services Private Limited vs. Parag Gupta and Associates judgment.
- The B.K. Educational judgment made it clear that the coming into force of the Code on 01.12.2016 is irrelevant to the triggering of any limitation period for the purposes of the Code.
- Article 62 was erroneously mentioned to be attracted in the case due to a deed of mortgage executed between the parties.
- An application under Section 7 of the Code is not meant to enforce any mortgage liability but to address a financial default trigger.
- Article 141 mandates following judgements in letter and spirit.
- The coming into force of the IBC Code does not affect the limitation for applications filed under the Code.
- Article 137 of the Limitation Act applies to petitions filed under the Code.
- The application under Section 7 of the Code was held not barred by limitation.
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Decision
- Appeal allowed with specific terms.
- NCLT order dated 29.01.2019 to remain stayed until further orders from NCLAT.
- Both sides can argue the case based on Article 137 of the Limitation Act.
- Judgment under appeal set aside and the matter to be determined afresh.
Also Read: Supreme Court Judgement: Determination of ‘Seat’ of Arbitration Proceedings
Case Title: SAGAR SHARMA Vs. PHOENIX ARC PVT. LTD.
Case Number: C.A. No.-007673 / 2019
